COMBINED REPORTING: OUTLINE; PURPOSE; GENERAL RULE; EFFECTIVE DATE; AND DEFINITIONS

Outline. 156, et seq. is organized as follows:

156. Outline, Effective Date, Purpose; General Rule; Revocation of Election to File Consolidated Returns; and Definitions

157. Composition of the Combined Group

158. Determination of a Unitary Business; Commonly Controlled; and Unitary Presumptions

159. Passive Holding Companies

160. Statute of Limitations

161. Water's-Edge Determination

162. Worldwide Reporting; and Initiation and Withdrawal of Election

163. Determination of Taxable Income or Loss Using a Combined Report

164. Combining Special Apportionment Formulas

165. Net Operating Losses

166. Tax Credits

167. Taxable Year; Part-Year Members

168. Designated Agent; Liability

169. Apportionment

170. Unincorporated Business Entities / Partnerships

171. Minimum Tax Payable

172. Estimated Tax Payments

173. Real Estate Investment Trusts

174. Regulated Investment Companies

175. FAS 109 Deduction

176. Time and Place for Filing Tax Returns; Extensions; Closing Out Separate Entities

Effective date. The combined reporting regulations shall be effective for tax years beginning after December 31, 2010.

Purpose. The purpose of the combined reporting regulations is to provide rules for the combined reporting of income as required by D.C. Official Code § 47-1805.02a (2005 Repl.) which requires a person subject to tax under chapter 18 of title 47 of the D.C. Official Code that is engaged in a unitary business with one or more persons to compute its share of the combined unitary income or loss attributable to the District using a combined report.

General rule. A person is required to file a combined report when it is subject to tax under chapter 18 of title 47 of the District of Columbia Official Code and is engaged in a unitary business with one or more other persons that are required to be included in a combined report under D.C. Official Code § 47-1805.02a (2005 Repl.) and the combined reporting regulations. The combined report shall be filed with the taxpayer member's tax return, and shall include the income and

apportionment information of all persons that are members of the combined group and such other information as required by the Chief Financial Officer.

156.5 Revocation of election to file consolidated returns. Any taxpayer election that was made under D.C. Official Code § 47.1805.02(5)(B) and (C) (2005 Repl.) and 9 DCMR § 109 is revoked for tax years beginning after December 31, 2010.

156.6 Definitions of terms and phrases. For purposes of combined reporting, the following terms and phrases shall have the meanings ascribed:

1. (a) Combined group - the group of all persons whose income and apportionment factors are required to be taken into account under D.C. Official Code § 47-1810.02 (2005 Repl.) and the DCMR in determining the taxpayer's share of the net business income or loss apportionable to the District;
2. (b) Combined group member – a person for which any part of such person's net income or loss is subject to combination and is, therefore, required to be included in a combined report;
3. (c) Combined report - a computational schedule or schedules, as required by D.C. Official Code § 47-1805.02a, and the combined reporting regulations or any other rules or procedures established by the Chief Financial Officer, which are to be attached to a taxpayer member's tax return and which report the income and apportionment information of all persons that are members of the taxpayer member's combined group, as well as any supporting information required by the Chief Financial Officer;
4. (d) Combined reporting regulations/rules – the rules provided under 9 DCMR §§ 156 through 175;
5. (e) Combined unitary income - the combined group's net income or loss attributable to the unitary business which is subject to combination under D.C. Official Code § 47-1805.02a before apportionment. Combined unitary income excludes any amounts that are not subject to combination pursuant to the water's-edge rules unless the taxpayer has made a valid worldwide election;

6. (f) Commonly owned or controlled - where more than fifty percent (50%) of the ownership interest and/or voting control of each member of the group is directly or indirectly owned by a common owner or owners, either corporate or non-corporate. In determining common ownership or control, the Chief Financial Officer may take into account any plan or arrangement, whether existing by operation of law, by contract, or otherwise, for bestowing or shifting ownership or voting control, in addition to the terms of any actual stock ownership or control;

7. (g) Commonly controlled group – a commonly controlled group exists where there is common ownership or control of stock representing more than fifty percent (50%) of the ownership interest and/or voting power of the members in the group;

8. (h) Corporation – Any entity or organization of any kind treated as a corporation for tax purposes under the laws of the District, wherever located, which, were it doing business in the District, would be subject to the tax imposed under chapter 18 of title 47 of the D.C. Official Code. A corporation includes any S corporation as defined in I.R.C. § 1361(a);
9. (i) Designated agent – the taxpayer member of the combined group who is responsible for acting on behalf of the group for matters relating to the combined report including filing the combined report See 9 DCMR § 168;
10. (j) Person – shall have the same meaning as defined under D.C. Official Code § 47-1801-01(39) except a “person” within the meaning of the combined reporting statute and regulations does not include individuals;
11. (k) Taxpayer member – A member of a combined group that has nexus in the District and is therefore subject to tax on its income under chapter 18 of title 47 of the D.C. Official Code.
12. (l) Unitary business – shall have the same meaning as defined under D.C. Official Code § 47-1801.04(55)(A). See 9 DCMR § 158.1.
13. (m) Water’s-edge rules - the rules provided under 9 DCMR § 161 under which some or all of a person’s items attributable to a unitary business are not subject to combination because of the degree of the person’s activity outside the United States; and
14. (n) Worldwide election - an election by the designated agent of the combined group on behalf of all of the members of the group to treat as the combined group, for purposes of 9 DCMR §§ 156 through 175, all persons that are engaged in the unitary business, wherever located, on such terms and in keeping with such requirements as are further explained by the combined reporting rules, forms, instructions or other notices that the Chief Financial Officer issues.

SOURCE: Final Rulemaking published at 59 DCR 10875 (September 14, 2012).